Perhaps, many of us haven’t realized yet how deeply social security institutions affect our day-to-day lives now and in the future. Consequently, we just take them for granted without care.
They do attract our attention when their officials hit the newspaper headlines after getting caught doing something irregular and scandalous.
Early this year, for instance, we became curious with officials of the Social Security System for stubbornly opposing the bill of then-Rep. Neri Colmenares to grant a P2,000 pension increase, which Congress had already approved. But after media contrasted this opposition with their quick approval to themselves of scandalously, over-generous and undeserved bonuses, we became furious with them.
We became agitated, but that was all that we did.
Most of us probably know now that the program benefits of SSS and its operational expenses including its staff’s compensation, fringe benefits and bonuses are paid from contributions of private-sector workers, employers, voluntary, and self-employed persons.
But only a few among us know that these expenses are also partly paid from the interests of members’ loans and returns from investments in stocks, fixed-income securities, and real estate.
And who knows that these loans and investments are also being sourced from members’ contributions that are not immediately needed for current operations?
Clearly, the fruits of these loans and investments belong to members themselves, even if they are credited matter-of-factly to the well-trained and professional SSS investment officers.
Of course, when investments go wrong, members as fund owners are entitled to an assurance that neither misdemeanor nor neglect was committed in managing them.
The members have to be assured, for instance, that their investments are still safe despite worldwide uncertainties that followed last Thursday’s exit of the British from the European Community.
The officials of SSS (with assets of about P450 billion) and the Government Service Insurance System (with almost a trillion-peso fund) must report how Brexit has affected their sizable stock investments. They better finish the accounting— marked-to-market as of yesterday—of these investments before they turn over their institutions’ operations to the new fiduciaries of the Digong presidency. If they don’t, more thorough auditors would do it for them.
Most of us are unaware that these social insurance institutions are tax-exempt and do not pay a single peso of tax on their investment earnings and on what they falsely call net incomes or profits.
In contrast, other private and some government corporations —including pension and pre-need plans, health maintenance organizations, and health, life and non-life insurance companies—are slapped taxes based on the values of their transactions and net incomes. Personal savings accounts are also taxed, including those that are yet to be set up under the unimplemented Personal Equity and Retirement Account Act of 2008.
We don’t know the value of these SSS and GSIS tax exemptions since they are undetermined, but they must be worth billions of pesos. We do know that a peso of tax exemption is always a peso deducted from funds that could be used to finance social protection programs such as PhilHealth, conditional cash transfer, and social pensions.
These tax exemptions could have been collected first and plowed back later as direct government subsidies to SSS and GSIS.
Isn’t this what local government units do—remit first all their tax collections to central government, then beg later for their share of them?
If SSS and GSIS were to follow the same procedure, government could decide how much share they deserve, and what part of these tax exemptions should be redistributed to other social protection programs.
This is the procedure that all tax-exempt corporations should follow.
Government as employer already contributes 12 percent of its payroll to GSIS. But because it does not tax GSIS investment incomes, it unwittingly and unnecessarily contributes these uncollected taxes to GSIS.
The lucky recipients are the relatively few GSIS members. Ironically, they do not deserve them because they now earn wages equal or better than their private sector counterparts.
SSS in 1954 was open to all Filipinos. At that time, it deserved its tax-exempt status because it benefitted every Filipino. This is no longer true; only employed and self-employed persons could enjoy its program.
A universal PhilHealth of 100 million Filipinos truly deserves a tax-exempt status. The problem—government also pays for the contributions of its indigent, sponsored, and senior citizen members who are already heavily subsidized by the much higher contributions of private and public sector employees.
Are these tax exemptions not government dole outs to non-indigent beneficiaries of SSS, GSIS and PhiHealth? They are, even if they are hidden and yet to be determined.
We are thus being unfair whenever we single out indigent senior citizens and poor families with young children as undeserving of government dole every time they receive their token P500 social pensions and P1,400 conditional cash transfer benefits.
A just and equitable government—which President Digong continues committing to us—should determine the actual value of these tax exemptions, and distribute them fairly to all—but more to the needy—if it really cares.